Archive: July, 2016

How Enterprise Contract Management Can Help with Uncleared Derivatives Regulations

Business as usual is no longer an option for banks.

With the new margin requirements for uncleared derivatives, it’s time for banks to buckle down and revise existing, or re-paper  their CSAs to be  compliant. These regulations are meant to promote central clearing and reduce the risks associated with trading. In an attempt to avoid a financial crisis another financial crisis the regulators are making sure there are more stringent rules around how much collateral has to be posted, who holds it, and how it is managed.. They’ve increased the threshold for uncleared swaps as well as the types of assets that are eligible as collateral for variation margin (VM). Furthermore, non-cash assets that qualify as initial margin (IM) can qualify as VM in trades depending on the counterparties.

Per regulation, all Credit Support Annexes  have to be revised or re-papered by the deadline, March 2017. Banks now have to start re-papering all their complex agreements in order to continue trading- business as usual. This task will be time consuming and will probably  involve heavy negotiations with counterparties, but can be greatly accelerated with technology to help with the re-papering process

Have you been putting this off? If you estimate that this is going to be a complicated and time consuming task, (you’re right), but delaying the process will reduce the time you have to negotiate and finalize your CSA’s.  If you don’t have the manpower to handle this task, there are options:

  1. You could outsource this work
  2. You could hire a third party firm that will take it off your hands, or
  3. You could automate the process with a little help from a purpose-built solution

The good news is you still have options. If you’re interested in learning more about what would work best for your firm, here are a few resources for you to consider:

Have a look and think it through, but keep in mind the clock keeps ticking and before you know it, it will be March.

Click the link to learn more about our re-papering solution.  

9.thumbnailPaul Nelmes is Exari’s VP of Sales, Financial Services. Reach out in the comments or on twitter @Paul_Exari.